Debt AM - good career move?
Have an opportunity to go into debt AM but not sure if it’s a good career move.
the role is for a opportunitic lender / PE fund that does transitional and construction lending. A lot of the loans originated in 2021/2022. The idea is that the role would require a lot of workouts/restructurings/heavy mods as capital markets have obviously moved
definitely not a servicing role, the fund works with a 3rd party servicer. More of a portfolio oversight role with heavy emphasis on workouts and dealing with distress
is this a bad career move? It seems like there is a somewhat negative stigma against debt AM. Note my prior experience is in acquisitions
appreciate any thoughts
Role would be fine. Tons to learn in workouts. But what happens to the role when the bad debt is worked out?
Any risk the lender goes belly up? If you think the work would be interesting and something you'd like to do long-term I don't see the problem.
Is this Bellwether?
I work in debt am after being on the deal side and it’s so boring. Workouts sound fun on paper but after a few of them you get the gist. If you have not done a workout before it could be a great learning opportunity but probably not something you want to do long term necessarily.
Commenting on all of the above, the idea would be to do workouts for the next 1-3 years and then as the distress naturally starts to fade, transition tor split time with something else internally i.e. equity AM or acq. I have no interest in being a debt originator.
I have some workout experience and love the work so not worried about that, more about pigeonholing and negative stigma of having debt AM in my title
So your goal is to work in equity acq/AM? I assume there are no opportunities to jump into that right now, or you want your foot in the door at this firm specifically?
Curious because these seem like very different roles (but somewhat complementary skillsets), so wondering what the motivation is here for debt AM.
Combo of getting a foot in the door and getting to do workouts which can be a lot of fun / good learning opportunity and if the next cycle is anything like the last it could be a while until there’s more workouts to do
note most of my experience is in equity am/acq, don’t want to pigeonhole myself out of it in the future
I think it depends on the aggressiveness of the fund. If they are willing to take back properties over modifying, it could end up where you spend a lot of time in foreclosure/legal world and then acting as an equity AM trying to get projects back on track. That to me is the sweet spot for Debt AM - third party servicer for billing/draw review, interesting workouts, and oversight of portfolio level decisions/IR (leverage strategy, relationship management and investor relations). You basically get paid for the fun part and don’t have to do the boring servicer part, but this really depends on the shop/portfolio.
Thanks this is good feedback. Definitely true with regards to it not being a servicing role as I was assured all servicing and base reporting done via 3rd party. It’s considered a client facing role by the firm.
Then I wouldn’t worry about being pigeon holed into anything - it will only matter how you spin it on your resume (if you even ever want to leave).
if you feel you aren’t getting traction just put AM instead of “Debt AM.” Tailor your resume to talk specifically about deals/workouts where you underwrote something or turned a profit on something. You don’t have to put “managed a x mm portfolio of mortgages;” put “managed x workouts that were exited producing y profit/x IRR”
at some point in your career it becomes less about hard skills and more about being a manager anyways. My resume barely even talks about the portfolio I manage - it is mostly leadership/portfolio management/relationship management highlights.
Which fund? Any insight on comp
You basically described my fund. My understanding is the AM guys are paid well, treated as investment professionals, and work a lot. I don’t have insight on comp but there’s a small % discount to acquisitions at the junior level
Debt AM for an opportunistic fund can actually be very interesting and great learning experience. You’ll be dealing with a ton of hairy shit and workouts.
Usually debt AM at institutional shops/banks can be mundane work and boring as hell. “Omg the debt yield covenant is 10.0% and this last quarter test they did a 9.9%!!! The asset is falling apart!! Let me spend the next day writing my report on my findings on this drastic movement in performance!”
Don't get me started on the endless subsequent talks with Credit to approve a waiver on such a massive breach...the headroom to BP is now only 14.9%!
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